Oil nears $40-a-barrel on demand hopes, tighter supplies

Oil prices extended gains on Monday, helping to take crude prices to climb to $40 a barrel levels, from the year's lows of around $30 a barrel, amidst a brightening of global demand outlook and tightening supplies.

Oil prices also gained from strong US jobs growth data that raised hopes of an improvement in demand in the world's largest oil consumer.

In Asian trading, Brent crude futures for April were trading at $39.49 a barrel at 0400 GMT, up 77 cents or 2 per cent from their last settlement.

US sweet light crude West Texas Intermediate (WTI) futures were trading at $36.63 a barrel, up 71 cents from the last close and 40 per cent above lows touched in February.

In London, European benchmark North Sea Brent crude for May delivery finished at $38.72 a barrel, up $1.65.

WTI notched a gain of roughly $3 over the week, while Brent was up more than $3.5 a barrel.

Oil prices are recording the second consecutive week of solid gains after hitting 13-year lows of around $30 a barrel in January. If the present trend continues and oil producers hold on to current production levels, oil may rise further, although nowhere near to levels above $100 a barrel.

Meanwhile, the latest US oil rig count from field service provider Baker Hughes showed a drop by 13 to 489, down 60 per cent from a year ago, pointing to a reduction in US crude production.

Also, China is expected to ease market barriers for transport, oil, and gas sectors, among key policy targets this year, Morgan Stanley said on Monday.

Besides tightening supply outlook and demand hopes, traders said that shifting sentiment was also lifting prices as large amounts of short positions were being closed and on bets on rising prices.